Q: In your recent Real Estate Matters column you said that when you pay off your mortgage you should receive — among other things — the original note marked “paid” or shown with a zero balance.
We paid off our mortgage in 2008 and I jumped through hoops at the time to get a simple answer to this question. The bottom line is that we got the letter from our lender congratulating us for paying our loan in full and the lender also filed the appropriate document with the courthouse release the lien from our home.
But we never did get the original note, as you state we should have. I had just paid off a car and expected to receive something similar to the title that was sent to me. When I inquired at the courthouse about my home, the clerk responded “What proof do you have that you own your home?” Should I pursue this further, or did the servicers’ copy of the note disappear permanently in the securitization machine?
A: Regrettably, I think your suspicions are correct and your original documents are lost somewhere in the big securitization machine, as you called it. The important thing for now is to keep the paid-in-full letter and know that the lien on your home was released. With those two documents you can show that your loan balance was paid off and future buyers of your home won’t have to deal with a recorded lien for a loan that is no longer active.
While you might want to get the other documents back, it’s unlikely that you will ever see them. During the last 10 years, lenders have gone through a huge number of changes. Some of these changes have resulted in lenders servicing loans but not having the original paperwork for those loans. They even created a system to avoid the paperwork that used to be required to transfer a loan from one lender to another.
For example, when a lender sells a loan they hold to a different party, it should record on the title to the property an assignment of that mortgage. By recording this assignment of the mortgage, notice would be given to buyers of the property or others that might have an interest in the home that the mortgage had been sold from one lender to another. In the new world system, the original lender has the mortgage recorded but the named entity on the mortgage might be MERS (the Mortgage Electronic Recording System).
Because so much is done electronically these days, the lenders sometimes forget that there is paperwork involved in the loan. But given that you received the letter and know the lien is released, that’s about all you will get and should be fine.
What I would recommend these days is that you pull a copy of your credit history from AnnualCreditReport.com. This is the official site from the three major credit reporting bureaus and you can (and should) to obtain a free copy of your credit history once per year from Experian, Equifax and TransUnion. When you download a copy of your credit report, you can verify that the credit reporting companies show that your loan balance is zero.
When you get your credit reports and they show your loan balance as zero, then you’ll get extra confirmation that you’re done with this loan.